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When Indiana decided last year not to run its own health exchange under Obamacare, Gov. Mike Pence said it was because the move would cost the state too much money without providing enough benefits.

The state revealed for the first time in a lawsuit filed this week that it also assumed that by opting for the federal health exchange that Hoosiers would not receive the federal tax credits designed to help needy people afford health insurance.

That, in turn, would prevent large employers in the state from being penalized under the health-care law for not providing insurance to workers, the ...